0 income tax ordinance 1979
TRANSCRIPT
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INCOME TAX
ORDINANCE
1979
An online publication by
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The Income Tax Ordinance, 1979
I NCOME TAX ORDI NANCE, 1 9 7 9ORDINANCE NO. XXXI o f 1 97 9
AN ORDINANCE
N o t e : Te x t in G r a y B a c k g r o u n d r e p r e s e n t s Am e n d m e n t s t h r o u g h F in a n c e O r d in a n c e , 2 0 0 2 o r la t e r .
CHAP TER I P RELI MI NARY S ECTI ON
1. Short title, extent and commencement
2. Definitions
CHAP TER I I ADMI NI S TRATI ON
3. Income tax authorities
4 Appointment of income tax authorities
4A. Private income tax authorities
4AA. Appointment of certain persons for survey etc.4AAA. Appointment of persons for audit of tax withholding
5. Jurisdiction of income tax authorities
6. Exercise of jurisdiction by a successor
7. Guidance to Deputy Commissioner
8. All Officer to follow the orders of the Central Board of
Revenue
CHAPTER I I ICHARGE OF TAX
9. Charge of income tax
10. Charge of super tax and surcharge
11. Scope of total income
12. Income deemed to accrue or arise in Pakistan
13. Un-explained investment, etc., deemed to be income
14. Exemptions
CHAPTER I VCOMPUTATIO N OF TOTAL
INCOME
15. Heads of income
16. Salary
17. Interest on securities
18. Deductions
19. Income from house property
20. Deductions
21. Liability in the case of co-owners
22. Income from business or profession
23. Deductions
24. Deductions not admissible
25. Amounts subsequently recovered in respect of deductions,
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etc.
26. Special provisions regarding business of insurance and
production of oil and natural gas and exploration and extraction of
other mineral deposits, etc.
27. Capital gains
28. Computation of capital gains29. Cost of acquisition, and consideration for transfer, how
determined
30. Income from other sources
31. Deductions
32. Method of accounting
32A. Documents, certificates, etc., to be furnished by certain
companies
33. Assessment of royalties or copy-right fees for literary or
artistic work
34. Set-off of losses
34A Set-off of losses of certain companies
35. Carry forward of business losses
36. Speculation losses
37. Capital losses
38. Limitation as to set-off and carry forward of losses in the
case of firms, partner, etc.
CHAP TER V ALLOW ANCES AND RELI EFS
39. Allowance for life insurance
40. Allowance for contributions to Provident Funds, etc.
41. Allowance for investment in Defence Savings and NIT
Certificates, etc
41A. Allowance for investment in shares
42. Allowance for purchase of books
43. Exemption for investments in the share-capital of approved
investment, holding and industrial companies
44. Retirement annuity contracts and trust schemes
44A. Retirement annuity contract for professionals
44AA. Retirement annuity scheme
44AAA. Allowance for mark up paid
45. Limitation as to relief
46. Contribution to benevolent fund and group insurance
47. Allowance for donations for charitable purposes48. Exemption from tax of newly established industrial
undertakings
49. Allowances to be treated as deductions from income
CHAPTER VIPAYMENT OF TAX BEFORE ASSESSMENT
50. Deduction of tax at source51. Certificate of deduction of tax
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52. Liability of persons failing to deduct or pay tax
52A. Recovery from the person from whom tax was not deducted
or collected.
53. Advance payment of tax
54. Payment of tax with return of income
CHAP TER VI I AS S ES S MENT55. Return of total income
55A. Method of furnishing return of total income
56. Notice for furnishing return of total income
57. Revised returns of total income
58. Wealth statement
59. Self-assessment
59A. Assessment on the basis of return
59B. Assessment under the simplified procedure for assessment
59C. Fixed Tax
59D. Tax on undisclosed income
59E. Fixed or minimum tax
60. Provisional assessment
60A. Provisional assessment in certain cases
61. Notice for production of books of account, etc.
61A. Utilisation of certain information
62. Assessment on production of accounts, evidence, etc .
62A. Assessment after appellate decision
62B. No title has been given to the section.
62BB. Powers of tax authorities to modify orders, etc.
63. Best judgement assessment
64. Limitation for assessment
65. Additional assessment
66. Limitation for assessment in certain cases
66A. Powers of Inspecting Additional Commissioner to revise
Deputy Commissioner's order
67. Reference to valuers
CHAPTER VII ITAX LI ABI LI TY I N S PECIAL
CASES
68. Registration of firms
69. Assessment of firms and partners70. Change in constitution of a firm
71. Discontinuance of business of dissolution of a firm or
association of persons
72. Assessment in case of discontinued business or profession
73. Succession to business, otherwise than on death
74. Liability in the case of a deceased person
75. Partition of a Hindu undivided family
76. Liability in the case of a private company going into
liquidation
77. Liability for payment of tax in the case of private companies,
firms and associations of persons
78. Liability of agents representing assessee
79. Income from transactions with non-residents
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80. Shipping business of non-residents
80A. Air transport business of non-residents
80AA. Tax on in come of non-residents from fees for technical
services
80AAA. Tax on income of non-residents from royalty
80B. Tax on income of certain persons from dividends and bankprofits, etc.
80BB. Tax on income of goods transport vehicles owners
80C. Tax on income of certain contractors and importers
80CC. Tax on income of certain exporters
80CD. Tax on income of industrial undertakings located in Export
Processing Zones
80D. Minimum tax on income of certain companies and
registered firms
80DD. Minimum tax on income of importers of edible oils, etc.
81. Assessment of persons about to leave Pakistan
82. Persons leaving Pakistan to obtain tax clearance certificate
83. Income from revocable transfer of assets, etc.
83A. Income of minor child
84. Liability certain in transaction in securities.
CHAPTER I XRECOVERY OF TAX
85. Payment of tax on demand
86. Charge of additional tax for failure to deduct and pay tax87. Charge of additional tax for failure to pay advance tax
88. Charge of additional tax for failure to pay tax with the
return
89. Charge of additional tax for failure to pay tax or penalty
90. Reduction in additional tax, consequential to reduction in
tax or penalty
91. Penalty for non-payment of tax
92. Recovery of tax from persons holding money on behalf of an
assessee
93. Recovery of tax by tax Recovery Officer
93A. Recovery of tax from persons assessed in Azad Jammu and
Kashmir
94. Recovery of tax by Collector
95. Initiation, validity, etc., of recovery proceedings
CHAP TER X REFUND AND TAX CREDI T
96. Refunds
97. Persons entitled to claim refund in certain cases
98. Refund where salary, etc. is paid in arrears
99. Form of application, disposal of claims for refund and
limitation
100. Refund on assessment and appeal, etc.
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101. Correctness of assessment, etc., not to be questioned
through refund applications
102. Additional payment for delayed refunds
103. Power to withhold refund in certain cases
104. Adjustment of refund against tax
105. Tax credit for investment in shares and debentures of EquityParticipation Fund
105A. Tax credit for investment in debentures or negotiable bonds
106. Tax credit for investment in share-capital of industrial
companies
107. Tax credit for replacement, balancing and modernisation of
machinery or plant
107A. Tax Credit
107AA. Tax credit for investment
CHAP TERXI P ENALTI ES
108. Penalty for failure to furnish return of total income and
certain statements
109. Penalty for failure to maintain prescribed accounts
110. Penalty for non-compliance of notice, etc.
111. Penalty for concealment of income, etc.
112. Penalty for failure to give notice of discontinuance of
business or profession
113. Penalty in case of registered firms
114. Penalty for failure to give notice by liquidator
115. Penalty for obstruction116. Imposition of penalty after notice of hearing, etc.
CHAP TER XI I OFFENCES AND P ROS ECUTI ONS
117. Prosecution for non-compliance of certain statutory
obligations
118. Prosecution for false statement in verification
119. Prosecution for concealment of income, etc.
120. Prosecution for abetment
121. Prosecution for disposal of property to prevent attachment,
etc.
122. Prosecution for unauthorised disclosure of information by a
public servant
123. Liability for prosecution in the case of company, etc.
124. Institution of prosecution proceedings without prejudice to
other action
125. Sanction of prosecution, etc.
126. Power to compound offence
127. Trial by Special Judge128. Power to tender immunity from prosecution
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CHAPTER XII IAPPEALS AND REVI SI ON
129. Appeal to the Appellate Additional Commissioner
130. Form of appeal and limitation
131. Procedure in appeal
132. Decision in appeal
133. Appointment of the Appellate Tribunal
134. Appeal to the Appellate Tribunal
135. Disposal of appeals by the Appellate Tribunal
136. Reference to High Court
137. Appeal to the Supreme Court
138. Revision by Commissioner
CHAPTER XII IASETTLEMENT O F CASES
138A. Income tax Settlement Commission
138B. Definitions
138C. Powers and functions of the Commission
138D. Application for settlement of cases
138E. Disposal of applications by the Commission.
138F. Recovery of sums due under order of settlement138G. Bar on subsequent application for settlement in certain
cases
138H. Order of settlement to be conclusive
138I. Power of Commission to re-open proceedings
138J. Proceedings before Commission to be judicial proceeding
138K. Communications of orders
CHAPTER XII IBDIRECTORATE GENERAL OF INSPECTION
138L. Appointment of Directorate General of Inspection
138M. Definitions
138N. Inspection authorities
138O. Jurisdiction of inspection authorities
138P. Functions and powers of Directorate-General
CHAPTER XI VMI SCELLANEOUS
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139. Statement regarding salary
140. Statement regarding dividends
141. Statement regarding interest, profit, rent, etc.
142. Statement regarding payments to non-residents and
contractors
143. Statement regarding certain payments143A. Statement regarding certain properties
143B. Statement regarding certain assessees
143C. Displaying of National Tax Number Certificate
143D. Obtaining of National Tax Number Card
143E. Liability of tax withholding agents to be registered
144. Power to call for information
145. Power of survey
146. Power to enter and search business premises
147. Assistance to income tax authorities
148. Power to take evidence on oath, etc.
149. Power to impound and retain books of accounts, etc.
150. Disclosure of information by a public servant
151. Limitation of exemption
152. Tax or refund to be calculated to the nearest rupee
153. Receipts to be given for moneys paid or recovered under
this ordinance
154. Service of notice
155. Certain mistakes not to vitiate assessments, etc.
156. Rectification of mistakes
157. Appearance by authorised representative
158. Proceedings under the Ordinance to be judicial proceedings
159. Proceedings against companies under liquidation
160. Computation of limitation period
161. Indemnity
162. Bar of suits in Civil courts
163. Avoidance of double taxation and prevention of fiscal
evasion
164. Unilateral relief
164A. Power to collect information regarding exempt income
165. Power to make rules
165A. Authority of approval
166. Repeal and savings
167. Removal of difficulties
S c h e d u l e s
Th e F ir s t S c h e d u l e
Part I Rate of Income Tax
Part II Rates of Super Tax
Part III Rates of Surcharge
Part IV No Heading
Part V Rates of income tax for companies
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Th e S e c o n d S c h e d u l e
Part I Exemptions from Total Income
Part II Reduction in Tax Rates
Part III Reduction in Tax Liability
Part IV Exemption from Specific Provisions
Th e Th i r d S c h e d u le
Rules for the Computation of Depreciation Allowance
Th e Fo u r t h S c h e d u le
Rules for the Computation of the Profits and Gains of Insurance Business
Th e F if t h S c h e d u le
Part I Rules for the Computation of the Profits and
Gains from the Exploration and Production of Petroleum
Part II Rules for the Computation of Profits and Gains
from the Exploration and Extraction of Mineral Deposits
Th e S ix t h S c h e d u le
Part I Recognised Provident Funds
Part II Approved Superannuation Funds
Part III Approved Gratuity Funds
Th e S e v e n t h S c h e d u le
Rules for the Computation of Relief from Tax by way of Credit in respect of
Foreign Tax.
Th e Eig h t h S c h e d u le
Rates of Tax Rebate on Income from Export of Goods.
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Section # 1
Section
1. Short title, extent and commencement.-
(1) This Ordinance may be called the Income Tax
Ordinance, 1979.
(2) It extends to the whole of Pakistan.
(3) It shall come into force on the first day of July,
1979.
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Section # 2
Section
2. Definitions.-
In this Ordinance, unless the context otherwise requires,-
(1) "agricultural income" means-
(a) any rent or revenue derived from
land which is situated in Pakistan and is
used for agricultural purposes;
(b) any income derived from such
land by
(i) agriculture; or
(ii) the performance by a
cultivator or receiver of rent-in-kind of any process ordinarily
employed by a cultivator or
receiver of rent-in-kind to render
the produce raised or received
by him fit to be taken to market;
or
(iii) the sale by a cultivator or
receiver of rent-in-kind of the
produce raised or received by
him, in respect of which no
process has been performed
other than a process of the
nature described in paragraph
(ii);
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(c) any income derived from any
building owned and occupied by the
receiver of the rent or revenue of any
such land, or occupied by the
cultivator, or the receiver of rent-in-kind, of any land with respect to which,
or the produce of which, any operation
mentioned in paragraphs (ii) and (iii) of
sub-clause (b) is carried on:
Provided that the building is on, or in
the immediate vicinity of, the land, and
is a building which the receiver of the
rent or revenue or the cultivator, or thereceiver of the rent-in-kind by reason of
his connection with the land, requires as
a dwelling-house, or as a store-house, or
other out-building;
(2) "Appellate Additional Commissioner"means a person appointed to be an Appellate
Additional Commissioner of Income Tax under
section 4;
(3) "Appellate Tribunal" means the Appellate
Tribunal constituted under section 133;
(4) "approved gratuity fund" means a gratuity
fund which has been, and continues to be,approved by the Commissioner in accordance
with the rules contained in Part III of the Sixth
Schedule;
(5) "approved superannuation fund" means a
superannuation fund, or any Part of a
superannuation fund, which has been, and
continues to be, approved by the Commissioner
in accordance with the rules contained in Part II
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of the Sixth Schedule;
(6) "assesses" means a person by whom any
tax or any other sum of money is payable under
this Ordinance, and includes-
(a) every person in respect of whom
any proceeding under this Ordinance
has been taken for the assessment of his
income or the income of any other
person in respect of which he is
assessable or of the amount of refund
due to him or to such other person;
(b) every person who is required to
file a return of total income under
section 55, section 72 or section 81;
and
(c) every person who is deemed to be
an assesses, or an assesses in default,
under any provision of this Ordinance.
(7) "assessment" includes re-assessment and
additional assessment and the cognate
expressions shall be construed accordingly;
(8) "assessment year" means the period of
twelve months beginning on the first day ofJuly next following the income year and
includes any such period which is deemed,
under any provision of this Ordinance, to be the
assessment year in respect of any income or
any income year;
(9) "average rate of tax" means the rate
arrived at by dividing the amount of taxcalculated on the total income by such income;
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(10) "banking company" has the same meaning
as in the Banking Companies Ordinance, 1962
(LVII of 1962), and includes any body
corporate formed by, or under, any law for thetime being in force which transacts the business
of banking in Pakistan;
(11) "business" includes any, trade, commerce
or manufacture, or any adventure or concern in
the nature of trade, commerce or manufacture;
(12) "capital asset" means property of any kind
held by an assesses, whether or not connectedwith his business or profession, but does not
include-
(i) any stock-in-trade (not being
stocks and shares), consumable stores
or raw materials held for the purposes
of his business or profession;
(ii) personal effects, that is to say,
movable property (including wearing
apparel, jewellery and furniture) held
for personal use by the assesses or any
member of his family dependent on
him; and
(iii) any land from which the income
derived by the assessee is agriculturalincome;
(13) "Central Board of Revenue" means the
Central Board of Revenue constituted under the
Central Board of Revenue Act, 1924 (IV of
1924);
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(14) "charitable purpose" includes relief of the
poor, education, medical relief and the
advancement of any other object of general
public utility;
(15) "Commissioner" means a person
appointed to be a Commissioner of Income Tax
under section 4 and includes a Director of Tax
Withholding and a Director of Intelligence and
Investigation;
(16) "company" means-
(a) company as defined in the
Companies Act, 1913 (VII of 1913); or
(b) a body corporate formed by or
under any law for the time being in
force; or
(bb) a trust formed by or under any law
for the time being in force; or
(c) a body corporate incorporated by
or under the law of a country outside
Pakistan relating to incorporation of
companies; or
(cc) a modaraba as defined in the
Modaraba Companies and Modarabas
(Floatation and Control) Ordinance,
1980 (XXXI of 1980);
(d) the Government of a Province;
(e) a foreign association, whether
incorporated or not, which the Central
Board of Revenue may, by general or
special order, declare to be companyfor the purposes of this Ordinance for
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such assessment year or years (whether
commencing before, on or after the first
day of July, 1979) as may be specified
in the said order;
(17) "co-operative society" means a co-
operative society registered under the Co-
operative Societies Act, 1912 (XI of 1912) or
under any other law for the time being in force
in Pakistan for the registration of co-operative
societies;
(17A) "Deputy Commissioner" means a person
appointed to be a Deputy Commissioner of
Income Tax under section 4 and includes an
Assistant Commissioner of Income Tax, an
Income Tax Officer, a Special Officer, a
Deputy Director of Tax Withholding, an
Assistant Director of Tax Withholding, a
Deputy Director of Intelligence andInvestigation, an Assistant Director of
Intelligence and Investigation and a Tax
Recovery Officer.
(18) "director" and "manager", in relation to a
company, have the meaning assigned to them in
the Companies Act, 1913 (VII of 1913);
(19) "Director-General of Intelligence andInvestigation means a person appointed to be a
Director-General of Intelligence and
Investigation under section 4;
(19A) "Director-General of Training and
Research" means a person appointed to be a
Director-General of Training and Research
under section 4 and includes a person appointed
to be a Director of Training and Research, an
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Additional Director of Training and Research, a
Deputy Director of Training and Research, an
Assistant Director of Training and Research or
any other officer, howsoever designated,
appointed by the Central Board of Revenue forthe purposes of any or all functions performed
by the Director General of Training and
Research and any other function that may be
assigned to him;
(19AA) "Director-General of Tax Withholding
means a person appointed to be a Director-
General of Tax Withholding under section 4;
(20) "dividend" includes
(a) any distribution by a company of
accumulated profits to its shareholders
or modaraba certificate holders,
whether capitalised or not, if such
distribution entails the release by the
company to its shareholders of all orany part of the assets of the company;
(b) any distribution by a company, to
its shareholders or modaraba certificate
holders, of debentures, debenture stock
or deposit certificates in any form,
whether with or without interest(Wordsand Comma omitted by Finance Ordinance, 2002 ", and
any distribution to its shareholders of shares by way of
bonus or bonus shares"), to the extent to
which the company possesses
accumulated profits whether capitalized
or not;
(c) any distribution made to the
shareholders or modaraba certificate
holders of a company on its liquidation,
to the extent to which the distribution isattributable to the accumulated profits
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of the company immediately before its
liquidation, whether capitalised or not;
(d) any distribution by a company to
its shareholders or modaraba certificateholders on the reduction of its capital,
to the extent to which the company
possesses accumulated profits, whether
such accumulated profits have been
capitalised or not; and
(e) any payment by a private
company of any sum (whether as
representing a part of the assets of the
company or otherwise) by way of
advance or loan to a shareholder or any
payment by any such company on
behalf, or for the individual benefit, of
any such shareholder, to the extent to
which the company, in either case,
possesses accumulated profits;
but does not include-
(i) a distribution made in accordance
with sub-clause (c) or sub-clause (d) in
respect of any share for full cashconsideration, or redemption of
debentures or debenture-stock, where
the holder of the share or debenture is
not entitled in the event of liquidation
to participate in the surplus assets;
(ii) any advance or loan made to a
shareholder by a company in the
ordinary course of its business, where
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the lending of money is a substantial
part of the business the company;
(iii) any dividend paid by a company
which is set off by the company againstthe whole or any part of any sum
previously paid by it and treated as a
dividend within the meaning of sub-
clause (c), to the extent to which it is so
set off.
Explanation.- The expression "accumulated profits",-
(a) wherever it occurs in this clause,
includes any reserve made up wholly or
partly of any allowance, deduction or
exemption admissible under this
Ordinance or the repealed Act, but
does not include capital gains arising
before the first day of April, 1946 or
after the thirty-first day of March, 1949
and before the eighth day of June,1963;
(b) as used in sub-clauses (a), (b), (d)
and (e), includes all profits of the
company up to the date of such
distribution or such payment, as the
case may be; and
(c) as used in sub-clause (c), includes
all profits of the company up to the date
of its liquidation.
(21) "domestic company" means a Pakistani
company and includes any company which, in
respect of its income liable to tax under this
Ordinance had made the prescribed
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arrangements for the declaration and payment,
within Pakistan, of the dividends (including
dividends on preference shares) payable out of
such income and for the deduction of tax from
such dividends;
(21A) "finance society" includes a co-operative
society which accepts money on deposit or
otherwise for the purpose of advancing loans or
making investments in the ordinary course of
business;
(22) "firm", "partner", and "partnership" have
the meanings respectively assigned to them in
the Partnership Act, 1932 (IX of 1932); and the
expression "partner" includes any person, who
being a minor, has been admitted to the benefits
of partnership;
(23) "foreign company" means a company
which is not a domestic company;
(24) "income" includes
(a) any income, profits or gains, from
whatever source derived, chargeable to
tax under any provision of this
Ordinance under any head specified in
section 15;
(b) any loss of such income, profits or
gains;
(c) any sum deemed to be income, or
income accruing or arising or received
in Pakistan under any provision of this
Ordinance but does not include, in
case of a shareholder of a domestic
company, the amount representingthe face value of any bonus share or
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the amount of any bonus declared,
issued or paid by the company to its
shareholders with a view to
increasing its paid up share capital.
Clause (d) omitted by Finance Ordinance, 2002, which
reproduced as under ;
(d) in the case of shareholder of a domestic
company, the amount representing the face value of any
bonus shares or the amount of any bonus declared,
issued or paid by the company to its shareholders with a
view to increasing its paid-up share capital,
(25A) "Income Tax Panel" means a panel
comprising an Inspecting AdditionalCommissioner, as its Chairman, and one or
more Deputy Commissioners.
(26) "income year", in relation to any
assessment year (hereafter in this clause,
referred to as 'the said assessment year'), means
(a) the financial year next precedingthe said assessment year; or
(c) such period as the Central Board
of Revenue may, in the case of any
person or class of persons or any source
of income, specify by notification in the
official Gazette,
and includes any period which, under anyprovision of this Ordinance, is deemed to be an
income year, or in respect of which a return of
total income is required to be furnished, or any
income is liable to be determined or assessed,
or any tax is payable.
Explanation.-
(a) Where, in any case,-
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(iii) both sub-clause (a) and
sub-clause (c) apply, the income
year as specified under clause
(c) shall be deemed to be theincome year of the assessee in
respect of his income from all
sources; and
(iv) the sources of income of an
assessee include two or more
sources in respect of which
income years have been
specified under clause (c), theincome year of the said income
years ending last shall be
deemed to be the income year of
the assessee in respect of his
income from all sources except
the sources to which clause (c)
applies; and
(b) as used in sub-clause (c), "period"
means any period of twelve months, or
any period of more or less than twelve
months, and includes any such period
as may commence from, or end on, any
date, including a date falling before the
commencement, or after the end, as the
case may be, of the financial year next
preceding the said assessment year;
(27) "Inspecting Additional Commissioner"
means a person appointed to be an Inspecting
Additional Commissioner of Income Tax under
section 4 and includes an Additional Director
of Tax Withholding and an Additional Director
of Intelligence and Investigation;
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(28) "Inspector of Income Tax" means a
person appointed to be an Inspector of Income
Tax under section 4 and includes an Auditor of
Tax Withholding and an Inspector of
Intelligence and Investigation;
(29) "interest" means interest payable in any
manner in respect of any money borrowed or
debt incurred (including a deposit, claim or
other similar right or obligation) and includes
any service fee or other charge in respect of the
money borrowed or debt incurred or in respect
of any credit facility which has not been
utilised;
(29A) "modaraba", "modaraba company" and
"Modaraba Certificate" have the meaning
respectively assigned to them in the Modaraba
Companies and Modarabas (Floatation and
Control) Ordinance, 1980 (XXXI of 1980);
(30) "non-resident" means a person who is notresident;
(31) "Pakistani company" means a company
formed and registered under the Companies
Act, 1913 (VII of 1913), or a body corporate
formed by, or under any law for the time being
in force in Pakistan, having in either case its
registered office in Pakistan, and includes a
trust formed by or under any law for the timebeing in force and the Government of a
Province of Pakistan;
(32) "person" includes an individual, a firm, an
association of persons, a Hindu undivided
family, a company, a local authority and every
other artificial juridical person;
(33) "prescribed" means prescribed by rules
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made under this Ordinance;
(34) "principal officer", used with reference to
a local authority, or a company or any
association of persons, includes-
(a) managing director, secretary,
treasurer, manager, agent or accountant,
by whatever designation known, of the
authority, company or association; and
(b) any person connected with the
management or administration of the
local authority, company, or association
upon whom the Deputy Commissioner
has served a notice of his intention of
treating him as the principal officer
thereof;
(35) "profession" includes vocation;
(36) "public servant" has the same meaning asin the Pakistan Penal Code (XLV of 1860), and
includes any income tax authority and any
person employed in the execution of this
Ordinance;
(37) "recognised provident fund" means a
provident fund which has been, and continues
to be, recognised by the Commissioner in
accordance with the rules contained in Part I of
the Sixth Schedule;
(37A) "Regional Commissioner" means a
person appointed to be a Regional
Commissioner of Income Tax under section 4
and includes a Director-General of tax
Withholding and a Director-General of
Intelligence and Investigation;
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(38) "registered firm" means a firm which has
been, and continues to be, registered under
section 68;
(39) "repealed Act" means the Income TaxAct, 1922 (XI of 1922);
(40) "resident", in relation to any income year,
means-
(a) an individual, who-
(i) is in Pakistan in that yearfor a period of, or for periods
amounting in all to, one hundred
and eighty two days or more; or
(ii) is in Pakistan for a period
of, or periods amounting in all
to, ninety days or more in that
year and who, within the four
years preceding that year, hasbeen in Pakistan for a period of,
or periods amounting in all to,
three hundred and sixty-five
days or more; or
(b) a Hindu undivided family, firm, or
other association of persons, the control
and management of whose affairs is
situated wholly or partly in Pakistan in
that year; or
(c) a Pakistani company or any other
company, the control and management
of whose affairs is situated wholly in
Pakistan in that year;
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(41) "return of total income" means the return
of total income in the prescribed form, setting
forth such particulars and accompanied by such
statements, certificates and other documents,
and verified in such manner, as may beprescribed;
(42) "share-holder" includes a preference share-
holder;
(43) "tax" means income tax, super tax,
surcharge and additional tax chargeable or
payable under this Ordinance, and includes any
penalty, fee or other charge or any sum or
amount leviable or payable under this
Ordinance;
(44) "total income" means the total amount of
income referred to in section 11 computed in
the manner laid down in this Ordinance; and
includes any income which, under any
provision of this Ordinance, is to be included inthe total income of an assessee;
(45) "unregistered firm" means a firm which is
not a registered firm; and
(46) "valuer" means a person appointed to be a
valuer under section 4.
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Section
3. Income tax authorities.-
(1) There shall be the following classes of income tax
authorities for the purposes of this Ordinance, namely:-
(a) Central Board of Revenue;
(aa) Regional Commissioners of Income
Tax;
(b) Director-General of Investigation and
Intelligence;
(bb) Director-General of Training and Research;
(bbb) Director-General of Tax Withholding;
(c) Commissioners of Income Tax;
(d) Additional Commissioners of Income
Tax, who may be either Appellate
Additional Commissioners of Income Tax
or Inspecting Additional Commissioners of
Income Tax;
(dd) Income Tax Panels;
(e) Deputy Commissioners of Income
Tax; and
(f) Inspectors of Income Tax.
(1A) Commissioners of Income Tax, Additional
commissioners of Income Tax, Income Tax Panels,Deputy Commissioners of Income Tax and Inspectors of
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Income Tax shall be subordinate to the Regional
Commissioners of Income Tax within whose jurisdiction
they perform their functions.
(2) Inspecting Additional Commissioners, Income TaxPanels, Deputy Commissioners of Income Tax and
Inspectors of Income Tax shall be subordinate to the
Commissioners within whose jurisdiction they perform
their functions.
(3) Deputy Commissioners of Income Tax and
Inspectors of Income Tax shall be subordinate to the
Inspecting Additional Commissioners within whosejurisdiction they perform their functions.
(4) Inspectors of Income Tax shall be subordinate to the
Deputy Commissioners of Income Tax within whose
jurisdiction they perform their functions.
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Section
4. Appointment of income tax authorities, etc.-
(1) The Central Board of Revenue may appoint as many
Regional Commissioners of Income Tax, Director-
General of Training and Research, Directors General of
Investigation and Intelligence Director-General of Tax
Withholding, Commissioners of Income Tax, Appellate
and Inspecting Additional Commissioners of Income
Tax, Deputy Commissioners of Income Tax and otherexecutive or ministerial officers and staff as may be
necessary.
(1A) The Regional Commissioner, or, where the Board
directs, the Commissioner may appoint as many Income
Tax Panels as may be necessary.
(1B) The Central Board of Revenue may make rules inrespect of constitution, procedure and working of the
Income Tax Panels.
(2) Subject to such orders or directions as may be issued
by the Central Board of Revenue from time to time, any
other income tax authority may appoint any income tax
authority subordinate to it and such other executive or
ministerial officers and staff, as may be necessary.
(3) The Central Board of Revenue or the Regional
Commissioner of Income Tax may appoint a sufficient
number of qualified persons to act as valuers for the
purposes of this Ordinance and the Central Board of
Revenue shall fix a scale of charges for the remuneration
of such persons.
(4) All appointments under this Ordinance shall be
subject to the rules and orders of the Federal Government
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regulating the terms and conditions of service of persons
in public services and posts.
4A. Appointment of firms of accountants.-
(1) Notwithstanding anything contained in this
Ordinance, the Central Board of Revenue may, appoint a
firm of Chartered Accountants as defined under
Chartered Accountants Ordinance, 1961 (Ordinance of
1961) to conduct the audit of any person.
(2) Any persons authorized by the firm referred to in
sub-section (1), while conducting an audit under that, sub-
section may, for the purposes of such audit enter into any
premises belonging to or in the occupation of the person
to whom the audit relates and call for and inspect and
seize books of accounts or documents in possession of
such person and wherever deemed necessary for
conducting the said audit may be authorized in writing,
by the Commissioner to exercise the powers laid downunder sections 144, 145, 146 and 148 of the Ordinance.
(3) The scope of audit under this section shall be such
as the Central Board of Revenue may determine on case
to case basis.
4AA. Appointment of certain persons for survey etc. -
(1) Notwithstanding anything contained in this
Ordinance, the Central Board of Revenue may, appoint
any private agency, firm or company to carry out survey
in respect of such persons or in such areas as it may
assign by an order in writing.
(2) The agency, firm or company appointed under sub-section (1), shall have the power to make such enquires
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and obtain from any person such information as Central
Board of Revenue may, by order in writing, specify.
(3) The Central Board of Revenue shall, by order in
writing, determine the scope of the survey referred to insub-section (1).
4AAA. Appointment of persons for audit of tax withholding.-
(1) Notwithstanding anything contained in this
Ordinance, the Central Board of Revenue may appoint
any private agency, firm or company to carry out audit of
tax withholding of a registered firm or a company.
(2) The Central Board of Revenue shall, by order in
writing, determine the scope of audit referred to in sub-
section (1).
(3) The private agency, firm or company appointed
under sub-section (1) shall have the power to enter the
premises and inspect books of accounts and records of
any person or classes of persons assigned to such agency,firm or company by an order in writing made by the
Director Tax Withholding, in this regard.
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Section
5. Jurisdiction of income tax authorities.-
(1) Subject to the provisions of this Ordinance,-
(a) the Regional Commissioners and the
Director-General of Training and
Research, Directors-General of
Investigation and Intelligence shallperform such functions, in respect of such
persons or classes of persons or such areas,
as may be assigned to them by the Central
Board of Revenue;
(b) the Commissioners and the Appellate
Additional Commissioners shall perform
their functions in respect of such persons
or classes of persons or such areas as the
Central Board of Revenue may direct; and
the Central Board of Revenue may, by
general or special order in writing, direct
that the powers conferred on the Appellate
Additional Commissioner by or under this
Ordinance shall, in respect of appeals
relating to specified cases or classes of
cases or specified persons or classes ofpersons, be exercised by the
Commissioners and for the purposes of any
proceedings in respect of such cases or
persons, references in this Ordinance or in
any rules made thereunder to "Appellate
Additional Commissioner" shall be deemed
to be references to "Commissioner":
Provided that the Central Board ofRevenue may, by general or special order
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in writing, direct that the jurisdiction of the
Commissioners exercising the powers of
an Appellate Additional Commissioner and
the Appellate Additional Commissioners
shall be determined by the RegionalCommissioner:
Provided further that the Regional
Commissioners may transfer jurisdiction in
respect of cases or persons from one
Commissioner subordinate to him to
another;
(c) the Inspecting Additional
Commissioners and the Deputy
Commissioners shall perform their
functions in respect of such persons or
classes of persons or such areas as the
Commissioners, to whom they are
subordinate, may direct; and the
Commissioner may, with the prior
approval of the Central Board of Revenueor, if the Central Board of Revenue so
directs, of the Regional Commissioner, by
general or special order in writing direct
that the powers conferred on the Deputy
Commissioner and the Inspecting
Additional Commissioner by or under this
Ordinance shall, in respect of all or any
proceedings relating to specified cases or
classes of cases or specified persons orclasses of persons, be exercised by the
Inspecting Additional Commissioner and
the Commissioner, respectively, and, for
the purposes of any proceedings in respect
of such cases or persons references in this
Ordinance or in any rules made thereunder
to "Deputy Commissioner" and "Inspecting
Additional Commissioner" shall be deemed
to be references to "Inspecting AdditionalCommissioner" and "Commissioner",
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respectively;
(cc) Notwithstanding anything contained
in clause (c), the Commissioner may by
general or special order in writing, directthat all or any of the powers conferred on
the Deputy Commissioner and the
Inspecting Additional Commissioner shall,
in respect of all or any proceedings relating
to specified cases or classes of cases or
specified persons or classes of persons, be
exercised by the Income Tax Panel and the
Commissioner, respectively, and, for the
purposes of any proceedings in respect of
such cases or persons, references in this
Ordinance or in any rules made thereunder
to "Deputy Commissioner" and "Inspecting
Additional Commissioner" shall be deemed
to be references to "Income Tax Panel" and
"Commissioner", respectively:
Provided that, any function performedby the Deputy Commissioner as members
of the Income Tax Panel, on the directions
of the said Inspecting Additional
Commissioner, shall be deemed to have
been performed in exercise of the powers
conferred on the Income Tax Panel:
Provided further that an order made
by the Income Tax Panel under anyprovision of this Ordinance shall be made
only by the said Inspecting Additional
Commissioner:
Provided further that, if any one
member of the Income Tax Panel, other
than the Chairman, is absent from any
sitting of the Income Tax Panel, the
proceedings of the Panel may continue,
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and no act, proceedings or order of the
Panel shall be invalid or be called in
question merely on the around of such
absence; and
(d) the Inspectors of Income Tax shall
perform such functions as may be assigned
to them by the Income Tax authority under
whom they are appointed to work.
Explanation.-The power to confer jurisdiction under
this sub-section shall include the power to transfer
jurisdiction from one income tax authority to another.
(2) Where any directions issued under sub-section (1)
have assigned to two or more income tax authorities the
same functions or functions in respect of the same
persons or classes of persons or the same area, they shallperform their functions in accordance with such orders as
the Central Board of Revenue, or any other authority to
whom they are subordinate, may make for the allocation
of functions and the distribution of the work to be
performed.
(3) Within the area assigned to him, the Deputy
Commissioner shall have jurisdiction,-
(a) in respect of any person carrying on
business or profession, if the place of
business or profession is situated within
such area, or where the business or
profession is carried on in more places than
one, if the principal place of the business
or profession is situated within such area;
and
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(b) in respect of any other person, if he
resides within the area.
(4) Where a question arises as to whether Deputy
Commissioner has jurisdiction to assess any person, the
question shall be determined by the Commissioner, or
where the question is one relating to the jurisdiction of
different Commissioners, by the Regional Commissioner
or Regional Commissioners concerned and, if they are
not in agreement, by the Central Board of Revenue.
(5) No person shall be entitled to call in question thejurisdiction of Deputy Commissioner after he has made
the return of total income or, where he has not made such
return, after the time allowed by any notice served on
him for making such return has expired.
(6) Notwithstanding anything contained in this section,
every Deputy Commissioner shall have all the powers
conferred by, or under, this Ordinance on DeputyCommissioner in respect of any income accruing or
arising or received or deemed, under any provision of
this Ordinance, to accrue or arise or be received within
the area assigned to him.
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Section
6. Exercise of jurisdiction by a successor.-
Whenever, in respect of any proceedings under this Ordinance, an
income tax authority is succeeded by another, the income tax authority
so succeeding may continue any proceeding from the stage at which it
was left by his predecessor.
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Section
7. Guidance to Deputy Commissioner.-
In the course of any proceedings under this Ordinance, the Deputy
Commissioner may be assisted, guided or instructed by any other
income tax authority to whom he is subordinate or any other person
authorised in this behalf by the Central Board of Revenue.
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Section
8. All officers to follow the orders of the Central Board of Revenue.-
Al1 officers and persons, employed in the execution of this Ordinance,
shall observe and follow the orders, instructions and directions of the
Central Board of Revenue:
Provided that no such orders, instructions or directions shall be given
so as to interfere with the discretion of the Appellate Additional
Commissioner in the exercise of his appellate functions or any valuer inthe exercise of his functions under this Ordinance.
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Section
9. Charge of income tax.-
(1) Subject to the provisions of this Ordinance, there
shall be charged, levied and paid for each assessment
year commencing on or after the first day of July, 1979,
income tax in respect of the total income of the income
year or years, as the case may be, of every person at the
rate or rates specified in the First Schedule:
Provided that where, by virtue of an amendment in the
First Schedule, the rate of income tax, for the purpose of
assessment in respect of any assessment year, is altered,
the rate of income tax existing prior to the said alteration
shall continue to apply in respect of any assessment year
to which the said existing rate is applicable.
(1A) Notwithstanding anything contained in section 37of the Modaraba Companies and Modaraba (Floatation
and Control) Ordinance, 1980 (XXXI of 1980), or any
other law for the time being in force, there shall be
charged, levied and paid for each assessment year
commencing on or after the first day of July, 1993,
income tax in respect of the total income of a modaraba
at the rate specified in the First Schedule:
Provided that the total income of a modaraba shall not bechargeable to tax for the first three assessment years after
commencement of its business if not less than ninety per
cent of its profits in a year is distributed to the modaraba
certificate holders.
(2) Where, by virtue of any provision of this Ordinance,
income tax is to be deducted at source or collected or
paid in advance, it shall be so deducted, collected or paid,
as the case may be, accordingly.
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Section
10. Charge of super tax and surcharge.-
(1) In addition to the income tax charged for any year,
there shall be charged, levied and paid for that year in
respect of the total income, or any part thereof, of the
income year or years, as the case may be, of every
person, an additional duty of income tax (in this
Ordinance referred to as 'super tax') and surcharge at the
rate or rates specified in the First Schedule;
Provided that where, by virtue of an amendment in the
First Schedule, the rate of super tax and surcharge, for
the purpose of assessment in respect of any assessment
year, is altered, the rate of super tax and surcharge
existing prior to the said alteration shall continue to apply
in respect of any assessment year to which the said
existing rate is applicable.
(2) Subject to the provisions of this Ordinance, the total
income of any person shall, for the purposes of super tax
and surcharge, be the total income as assessed for the
purposes of income tax, and where an assessment has
become final and conclusive for the purposes of income
tax for any year, the assessment shall also be final and
conclusive for the purposes of super tax or surcharge, as
the case may be, for the same year.
(3) All the provisions of this Ordinance relating to the
charge, assessment, deduction at source, collection, or
payment in advance, recovery and refund of income tax
shall apply, so far as may be, to the charge, assessment,
deduction at source, collection, payment in advance,
recovery and refund of super tax and surcharge, as the
case may be.
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Section
11. Scope of total income.-
(1) Subject to the provisions of this Ordinance, the total
income, in relation to any assessment year, or a person,-
(a) who is a resident, includes all income
from whatever source derived, which-
(i) is received, or is deemed to be
received, in Pakistan in the income
year by, or on behalf of, such
person; or
(ii) accrues or arises, or is deemed
to accrue or arise, to him in Pakistan
during such year; or
(iii) accrues or arises to him
outside Pakistan during such year;
(b) who is a non-resident, includes all
income from whatever source derived,
which-
(i) is received, or is deemed to be
received, in Pakistan in the income
year by, or on behalf of, such
person; or
(ii) accrues or arises, or is deemed
to accrue or arise, to him in Pakistan
during such year;
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(2) Notwithstanding anything contained in sub-section
(1), where any amount consisting of either the whole or a
part of any income has been included in the total incomeof a person on the basis that it has accrued or arisen, or is
deemed to have accrued or arisen, to him in any year, it
shall not be included again in his total income on the
basis that it is received, or is deemed to be received, by
him in Pakistan in any other year.
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Section
12. Income deemed to accrue or arise in Pakistan.-
(1) Income which would be chargeable under the head
"Salary" shall be deemed to accrue or arise in Pakistan,
wherever paid, if it is earned in Pakistan, or if it is paid
by, or on behalf of, the Government or a local authority
in Pakistan to a person in the service of such Government
or authority, as the case may be.
(2) Any income accruing or arising, whether directly or
indirectly, through or from-
(a) any business connection in Pakistan;
(b) any asset, property or source of
income in Pakistan; or
(c) transfer of a capital asset situated in
Pakistan,
shall be deemed to accrue or arise in Pakistan:
Provided that, in the case of a business all the operations
of which are not carried out in Pakistan, the income of
the business deemed under this sub-section to accrue or
arise in Pakistan shall be only such part of the income as
is reasonably attributable to the operations carried out in
Pakistan.
(3) Any income by way of interest payable by-
(a) a person who is a resident, exceptwhere the interest is payable in respect of
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any debt incurred, or moneys borrowed
and used, for the purposes of a business or
profession carried on by such person
outside Pakistan or for the purposes of
making or earning any income from anysource outside Pakistan; or
(b) a person who is a non-resident, where
the interest is payable in respect of any
debt incurred, or moneys borrowed and
used, for the purposes of a business or
profession carried on by such person in
Pakistan or for the purposes of making or
earning any income from any source inPakistan,
shall be deemed to accrue or arise in Pakistan.
(4) Any income by way of royalty payable by-
(a) a person who is a resident, except
where the royalty is payable in respect of
any right, property or information used or
services utilised for the purposes of a
business or profession carried on by such
person outside Pakistan or for the purposes
of making or earning any income from any
source outside Pakistan; or
(b) a person who is a non-resident, where
the royalty is payable in respect of any
right, property or information used or
services utilised for the purposes of a
business or profession carried on by such
person in Pakistan or for the purposes of
making or earning any income from any
source in Pakistan,
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shall be deemed to accrue or arise in Pakistan.
Explanation.- For the purposes of this sub-section andsub-section (4) of section 31, "royalty" means
consideration (including any lump-sum consideration but
excluding any consideration which would be the income
of the recipient chargeable under the head "Capital
gains") for-
(i) the transfer of all or any rights
(including the granting of a licence) in
respect of a patent, invention, model,
design, secret process or formula, or trade
mark or similar property;
(ii) the imparting of any information
concerning the working of, or the use of, a
patent, invention, model, design, secret
process or formula, or trade mark or
similar property;
(iii) the use of any patent, invention,
model, design, secret process or formula,
or trade mark or similar property;
(iv) the imparting of any information
concerning technical, industrial,
commercial or scientific knowledge,
experience or skill;
(v) the transfer of all or any rights
(including the granting of a licence) in
respect of any copy-right, literary, artistic
or scientific work including films or video
tapes for use in connection with television
or tapes for use in connection with radio
broadcasting but not including
consideration for the sale, distribution or
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exhibition of cinematograph films; or
(vi) the rendering of any services in
connection with the activities referred to in
clauses (i) to (v).
(5) Any income by way of fees for technical services
payable by-
(a) a person who is a resident, except
where the fees are payable in respect of
services utilised in a business or profession
carried on by such person outside Pakistan
or for the purposes of making or earning
any income from any source outside
Pakistan; or
(b) a person who is a non-resident, where
the fees are payable in respect of services
utilised in a business or profession carriedon by such person in Pakistan or for the
purposes of making or earning any income
from any sources in Pakistan,
shall be deemed to accrue or arise in Pakistan.
Explanation.- For the purposes of this sub-section,clause (b) of section 24, sub-section (2) of section 30, sub-
section (3A) of section 50 and section 80AA, "fees for
technical services" means any consideration (including
any lump-sum consideration) for the rendering of any
managerial, technical or consultancy services (including
the provision of the services of technical or other
personnel) but does not include consideration for any
construction, assembly or like project undertaken by the
recipient or consideration which would be income of the
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recipient chargeable under the head "Salary".
(6) As used in sub-sections (3), (4) and (5), theexpression "a person who is resident" includes
Government.
(7) Where an assessee has made any loan or advance to
any person on which no interest has been charged or the
rate at which interest has been charged is less than the
rate (hereinafter referred to as the 'said rate') arrived at by
adding two per cent to the bank rate notified by the State
Bank of Pakistan as applicable on the date on which theloan or advance was made, the amount not charged or the
amount equal to the interest computed at the said rate as
reduced by the interest actually charged shall be deemed
to be the income of the assessee and shall be included in
his total income:
Provided that nothing contained in this sub-section shall
apply to-
(a) any loan or advance made by an
assessee to an employee in accordance
with the terms and conditions of his
employment and for such purpose or
purposes; or
(b) such assessee or persons or class or
classes of assessees or persons, as may bespecified in this behalf by the Central
Board of Revenue by notification in the
official Gazette:
Provided further that nothing contained in
this sub-section shall apply in respect of
any assessment year beginning on or after
the first day of July, 1985.
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(8) Any income derived by an assesses in any income
year (hereafter in this sub-section referred to as the 'said
income year') from any business or profession, which hasbeen or was, discontinued, or any other source which has
ceased, as the case may be, at any time before the
commencement, or during the course, of the said income
year shall, if such income would have been chargeable to
tax if it had been received in the income year in which it
accrued or arose, be deemed to be income chargeable to
tax from such business or profession or other source,
which shall, for the purposes of this Ordinance, be
deemed to have been carried on, or not ceased, as thecase may be, before the commencement, or during the
course, of the said income year.
(9A) Where an assessee, being a public company other
than a scheduled bank or a modaraba, derives profits for
any income year but does not distribute cash dividends
within seven months of the end of the said income year,
or distributes dividend to such an extent that its reserves,
after such distribution, are in excess of fifty per cent of
its paid up capital, so much of its reserves as exceed fifty
per cent of its paid up capital shall be deemed to be the
income having accrued to such company during that
year:
Provided that in respect of assessment year commencing
on the first day of July, 1999, the cash dividend
distribution made within the following period shall betreated as distribution for the purposes of this sub-section
:-
(i) where the income year ended on a
date prior to the thirtieth day of June, 1999,
and the distribution is made within a period
of three months reckoned from the first day
of July, 1999; or
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(ii) where the income year ended on the
thirtieth day of June, 1999, and the
distribution is made within a period of
eight months reckoned from the first day of
July 1999.
Explanation. - For the purposes of this sub-
section, the expression "reserves" shall
have the meaning as may be prescribed.
(10) Any dividend paid to any share-holder without
Pakistan by a Pakistani company shall be deemed to be
income accruing or arising in Pakistan to such share-
holder.
(11) Any dividend declared or distributed by a company
shall be deemed to be the income of the income year in
which it is declared and shall be included in the total
income of the assessee of that year:
Provided that, where any dividend is declared within six
weeks of the end of the income year, it shall be deemedto be the income of the income year in which it is
distributed and included in the total income of that year.
(12) Where any assets not being stock-in-trade are
purchased by an assesses from any company and the
Deputy Commissioner has reason to believe that the price
paid by the assesses is less than the fair market value
thereof, the difference between the price so paid and the
fair market value shall, be deemed to be income of theassesses chargeable to tax under this Ordinance.
Provided that in the case of an asset leased by a
scheduled bank, a financial institution, modaraba or a
leasing company the fair market value shall mean the
residual value paid by the assessee, being the first lessee,
on the maturity of the lease agreement and the amount
paid by way of lease rentals and other charges sohowever that the aggregate of such payments and the
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residual value is not less than the original cost of the
asset.
(13) Where an assessee, being the owner of a building,
receives from any person to whom such building or anyPart thereof is let out on rent any amount which is not
adjustable against the rent payable by such person, such
amount shall be deemed to be the income of the assessee
and chargeable to tax under the head "Income from house
property" in the income year in which such amount is
received and the nine income years next following the
said income year in equal proportion; and the amount so
allocated to each income year shall be deemed to be the
rent received in respect of such building or a Part thereof.
(14) Where the amount mentioned in sub-section (13) is
refunded by the assessee to the tenant on termination of
the tenancy before expiry of ten years as aforementioned,
no portion of such amount shall be allocated to the
income year in which it is refunded or any income year
thereafter except in a case mentioned in sub-section (15).
(15) Where, on the termination of the tenancy of one
person and refund to that person of the amount
mentioned in sub-section (13), the assessee lets out such
building or such part thereof, as the case may be, to
another person and receives from such other person any
amount (hereinafter called the "succeeding amount")
which is not adjustable against the rent payable by such
other person, the succeeding amount as reduced by such
portion of the earlier amount as was charged to tax, shallbe deemed to be the income of the assessee chargeable
under the head "Income from house property" and
charged to tax as laid down in sub- section 13.
(16) Where an assessee receives any amount in
consideration for vacating the possession of a building or
a part thereof of which he is a tenant, the said amount as
reduced by the amount, if any, paid by the assessee for
acquiring possession of such building or part thereof
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shall be deemed to be the income of the assessee and
chargeable to tax under the head 'Income from other
sources' in the income year in which it is received and
nine income years next following the said income year in
equal proportion.
(17) The provisions of sub-sections (13) to (16) shall also
apply to an assessee who has received the amount
referred to in sub-sections (13), (15) or (16) in the
income year relevant to the assessment year commencing
on the first day of July, 1980, or in any earlier income
year so, however, that income chargeable to tax in the
manner laid down in the said sub-sections shall be
charged to tax only in respect of the income year relevantto the assessment year commencing on the first day of
July, 1980, or any assessment year thereafter.
(18) Where any sum claimed, or shown, to have been
received as loan or advance or gift by an assessee during
any income year commencing on or after the first day of
July, 1998, from any person, not being a banking
company, or a financial institution notified by the CentralBoard of Revenue for this purpose, otherwise than by a
crossed cheque drawn on a bank, or through a banking
channel from a person holding a National Tax Number,
the said sum shall be deemed to be the income of the
assessee for the said income year chargeable to tax under
this Ordinance; Provided that, where the said loan or
advance or gift is claimed or shown by way of the
explanation, referred to in sub-section (1) of section 13,
in a case to which the first proviso to the said sub-sectionapplies, the income under this sub-section shall relate to
the assessment year referred to in the said proviso.
(19) Where an assessee, being a scheduled bank, a
financial institution, or such modaraba or leasing
company as is approved by the Central Board of Revenue
for the purposes of the Third Schedule, has leased out, on
or after the first day of July, 1985, any asset, whether
owned by it or not, to another person, any amount paid or
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payable by the said person in connection with the lease of
the said asset shall be deemed to be the income of the
said assessee.
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Section
13. Un-explained investments, etc., deemed to be income.-
(1) Where,
(a) any sum is found to be credited in the
books of an assessee maintained for any
income year; or
(aa) the assessee is found to have made
any investment or is found to be the owner
of any money or valuable article, in any
year; or
(b) the assessee is found to have made
any investment in any income year which
is not recorded in the books of account
maintained for that income year or is notshown in the wealth statement or return of
wealth furnished under section 58 in
respect of that year; or
(c) the assessee is found in respect of any
income year to be the owner of any money
or valuable article which is not recorded in
the books of account, if any, maintained by
him or is not shown by him in any wealthstatement or return of wealth furnished
under section 58 in respect of that year; or
(d) the assessee has made investment in
any income year or is found in respect of
any such year to be the owner of any
valuable article and the Deputy
Commissioner finds that the amount
expended on making such investment or in
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acquiring such valuable article exceeds the
amount recorded in this behalf in the books
of account maintained by him or shown in
the wealth statement or return of wealth
furnished under section 58 in respect ofthat year; or
(e) an assessee has, during any income
year, incurred any expenditure,
and the assessee offers no explanation about the
nature and source of such sum, investment, acquisition of
the money or valuable article, excess amount or the
money from which the expenditure was met, as the case
may be, or the explanation offered by him is not, in the
opinion of the Deputy Commissioner, satisfactory, the
sum so credited, the value of the investment, the money
or the value of the article, the excess amount or the
amount of the expenditure, as the case may be, shall be
deemed to be the income of the assesses of such income
year chargeable to tax under this Ordinance:
Provided that, where any act referred to in clauses
(a) to (e) is discovered after the assessment of income of
the income year to which the said act relates has been
made, the income chargeable to tax under this section
shall be included in the total income of the income year
relevant to the assessment year in which the said
discovery is made:
Provided further that in cases referred to in clauses(aa) to (e) such income shall not be chargeable to tax
unless approval of the Inspecting Additional
Commissioner has been obtained.
(2) Where the value of any investment or article
referred to in clause (aa), (b), (c) or (d), or the amount of
expenditure referred to in clause (e) of sub-section (1) is,
in the opinion of the Deputy Commissioner, too low, the
Deputy Commissioner may determine, after giving a
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reasonable opportunity to the assessee of being heard, a
reasonable value or the amount thereof, as the case may
be, and all the provisions of sub-section (1) shall have
effect accordingly.
(2A) The provisions of this section shall not apply in
respect of any amount of foreign exchange remitted from
abroad through normal banking channels and got
encashed in Pakistan rupees from a scheduled bank and a
certificate is produced to that effect from such bank.
(3) The Central Board of Revenue may by rules provide
for the determination of the value of any property or
article for the purposes of this section.
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Section
14. Exemption.-
(1) The incomes or classes of income, or persons or
classes of persons specified in the Second Schedule shall
be-
(a) exempt from tax under this
Ordinance, subject to the conditions and to
the extent specified therein; or
(b) liable to tax at such rates, which are
less than the rates specified in the First
Schedule, as are specified therein; or
(c) allowed a reduction in tax liability,
subject to the conditions and to the extent
specified therein; or
(d) exempt from the operation of any
provision of this Ordinance, subject to the
conditions and to the extent specified
therein :
Provided that, where any income which is exempt
from tax under any provision of the Second Schedule,
such income, as may be specified in the said Scheduleand subject to such conditions as may be specified
therein, shall be included in the total income, so however
that the tax shall not be payable in respect of such
income.
(2) the Federal Government may, from time to time, by
notification in the official Gazette, make such
amendment in the Second Schedule by-
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(a) adding any clause or condition
therein;
(b) omitting any clause or condition
therein; and
(c) making any change in any clause or
condition therein,
as it may think fit, and all such amendments shall
have effect in respect of any such year beginning on any
date before or after the commencement of the financial
year in which the said notification is issued:
Provided that the Federal Government shall place
before the National Assembly all amendments made by it
in the Second Schedule during a financial year.
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Section
15. Head of income.-
All income shall, for the purposes of the charge of tax and the
computation of total income, be classified under the following heads,
namely:-
(a) Salary;
(b) Interest on securities;
(c) Income from house property;
(d) Income from business or profession;
(e) Capital gains; and
(f) Income from other sources.
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Section
16. Salary.-
(1) The following incomes shall be chargeable under the
head "Salary", namely:-
(a) any salary due to the assessee from an
employer in the income year, whether paid
or not; and
(b) any salary (including arrears or
advances of salary) paid to the assessee in
the income year by an employer:
Provided that where any salary is included in the
total income on the basis that it has become due to an
assessee, it shall not be included again on the basis that it
is paid.
(2) For the purposes of sub-section (1),-
(a) "salary" includes
(i) any wages;
(ii) any annuity, pension or
gratuity;
(iii) any fees, commissions,
allowances, perquisites or profits in
lieu of, or in addition to, salary or
wages;
(b) "perquisite" includes-
(i) the value of rent-free
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accommodation;
(ii) the value of any concession in
the matter of rent respecting any
accommodation;
(iii) any sum payable by the
employer, whether directly or
indirectly, to effect an insurance on
the life of, or to effect a contract for
any annuity for the benefit of, the
assessee, or his spouse or any
dependent child;
(iv) the value of any benefit
provided free of cost or at a
concessional rate;
(v) any sum paid by an employer
in respect of any obligation of an
employee;
(c) "profits in lieu of salary" includes-
(i) the amount of any
compensation due to, or received
by, an assessee from his employer
at, or in connection with, the
termination of, or the modification
of any terms or conditions relating
to, his employment;
(ii) any payment due to, or
received by, an assessee from a
provident or other fund to the extent
to which it does not consist of
contributions by the assessee and
the interest on such contributions;
(d) "employer" includes a former
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employer; and
(e) "employee", in relation to a company,
includes a managing director or any other
director or other individual, who,irrespective of his designation, performs
any duties or functions in connection with
the management of the affairs of the
company.
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Section
17. Interest on securities.-
(1) The following income shall be chargeable under the
head "Interest on